30th Jul 2014 10:03
LONDON (Alliance News) - Lonmin PLC Wednesday said it has entered into binding agreements with the Bapo ba Mogale Traditional Community in South Africa which will enable it to meet requirements under the country's Black Economic Empowerment targets.
The FTSE 250-listed platinum mining company said that the community will waive its current statutory right to receive royalties from Lonmin's operating companies Eastern Platinum Ltd and Western Platinum Ltd in exchange for a lump cash royalty payment which will be used by the community to subscribe for Lonmin shares and a deferred royalty payment of ZAR20 million in each of the five years following the deal.
Lonmin said the Bapo ba Mogale community will use the deferred payment to pay the administrative costs of running, controlling and directing the affairs of the Bapo community.
Under the deal, Eastern Platinum Ltd will acquire all of the shares in Bapo ba Mogale Mining Co Ltd from the Bapo, which holds the community's 7.5% participating interest in the Pandora mine.
The Bapo will use the lump sum cash royalty payment to subscribe for shares worth ZAR564 million in Lonmin, which will be subject to a lock-in period of ten years.
Lonmin said it expects the deal to complete during the final quarter of 2014.
The company also said it will provide an opportunity for the community to participate in the business and will create a developmental trust for members of the community to promote educational initiatives and healthcare improvement as well as address the developmental needs of the Bapo.
"On behalf of the Board I would like to welcome the Bapo community as an important shareholder in our Company. We look forward to building a strong relationship with them over the years to come," Chairman Brian Beamish said in a statement.
Lonmin said that, following discussions with the South African Department of Mineral Resources, it believes the deal will increase Eastern Platinum Ltd and Western Platinum Ltd's Black Economic Empowerment equity status by 3.3%, helping it to achieve the necessary target of 26% effective Black Economic Empowerment equity ownership by December 31.
The Black Economic Empowerment programme was launched by the South African government in 2007 to deal with inequalities in the workplace linked to the former apartheid regime.
The process measures a company by employment preference, skills development, ownership, management, socioeconomic development and preferential procurement.
Lonmin shares were trading 0.5% lower at 239.30 pence on Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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